Recent studies show that 60% of businesses outsource some or all of their software development needs. This number includes everything from custom apps to Software as a Service (SaaS). With the global SaaS market projected to surpass $1.2 trillion by 2034, SaaS outsourcing is becoming a golden rule for companies aiming to stay competitive.
But with this growing SaaS development outsourcing popularity comes more options, more providers, and — let’s be honest — more confusion about what’s right for you. In this guide, JetBase is going to explain the benefits, costs, and more in between to help you decide on the most suitable SaaS outsourcing strategy.
What Is SaaS Outsourcing?
Let’s start with a quick refresher on SaaS. It’s a software licensing model where software is delivered over the Internet. Users can access the service through a browser without installing it locally. Think of Google Workspace or Slack — these are SaaS applications.
SaaS outsourcing is all about expanding your internal team’s capabilities. Instead of developing, hosting, or supporting the software entirely in-house, you can partner with external experts who can tackle parts of the process, including:
Not only that, but you can also delegate customer support, security audits, and other relevant tasks to third-party providers.
Why Do SaaS Companies Outsource Development?
Let’s get real: running a SaaS business can be complicated. You not only have to deal with product development but also juggle customer acquisition, marketing, sales, and numerous other processes. Outsourcing SaaS development is a way to get extra hands and reap the following benefits:
Reduced Costs and Budget Optimization
Outsourcing SaaS lets you cut costs significantly. How come? You don’t need to hire and train an in-house team, cover payroll taxes, and invest in infrastructure. All you have to do is simply pay for the required services. In fact, you can reduce development costs by 40% to 70% with outsourcing.
Access to Global Talent and Specialized Skills
Many SaaS products need specific skill sets — such as cloud computing, data science, or AI — that can sometimes be challenging to source locally. And since around 53% of businesses find it hard to recruit developers with the right skills, outsourcing is a go-to option that opens access to a global talent pool with exactly the expertise you desire.
Faster Time-to-Market
As a SaaS company owner, you know how critical it is to stick to your project roadmap. If your product’s release date is set in stone, your customers can't tolerate delays due to team training or other unforeseen circumstances.
By outsourcing, you’re working with teams that already have established workflows and relevant experience, so you can launch your product or new features sooner — without delays.
Scalability and Flexibility for Growing Projects
As your project evolves, you’ll need to scale your human resources up or down. SaaS development outsourcing lets you do just that, quickly. Not being locked into long-term costs for specialists you only need temporarily is also a huge relief for budget-conscious projects.
Minimal Management Overhead
Having an in-house development team means you oversee every aspect of your project, including resource allocation, product quality, and team performance. When you outsource, much of this responsibility shifts to the outsourced provider and frees your time for business-critical work.
Learning and Adapting Best Practices from Global Experts
One of the hidden gems of outsourcing SaaS development is that you can learn from experienced global teams. You can count on their knowledge of industry best practices, software development methodologies, and the latest trends to stay ahead in a competitive market.
SaaS Outsourcing Models
Having sorted out why you should outsource, let’s figure out how exactly you can do this. Here are the three most common models of outsourcing SaaS development:
Time & Material SaaS Outsourcing Model
With this model, you pay the outsourcing provider based on the hours worked and the resources used. Simply put, you pay for the result. Time & material is perfect if your project’s scope isn’t entirely clear or if your requirements might change along the way.
Dedicated Team SaaS Outsourcing Model
In this model, you essentially “hire” an entire development team from the outsourcing provider. This team works exclusively on your project and serves as a replacement or an extension of your in-house staff. Opt for this cooperation approach if you need complete control over SaaS development.
Fixed-Cost SaaS Outsourcing Model
As the name suggests, you agree on a set price for the entire project upfront. The outsourcing provider then delivers your SaaS product within that budget and timeframe. This model is great if you have specific features and deadlines in mind and don’t expect many changes to be made during development.
SaaS Outsourcing vs. In-House Development
So, you’ve explored the three most popular models of outsourcing SaaS development but are still wondering: Is developing my product in-house better? Let’s figure this out by comparing the two approaches.
| SaaS Development Outsourcing | In-House SaaS Development | |
|---|---|---|
| Cost | More cost-effective, as you pay for only the resources and skills needed at the time | Higher long-term costs due to payroll, benefits, and infrastructure |
| Talent Availability | Access to a global pool of diverse talent | Limited to local talent unless you hire remotely |
| Scalability | Easily scalable based on project needs | Limited scalability, increasing or reducing team size is slower and more costly |
| Time-to-Market | Faster due to established workflows | Slower due to hiring, training, and onboarding processes |
| Management Overhead | Minimal management needed, outsourcing partners handle the development process | High management responsibility, direct oversight |
| Control | Less direct control over development | Full control over development processes |
| Expertise | Access to various specialized skill sets and tools | Dependent on the in-house team’s knowledge |
The SaaS Outsourcing Process
If you’ve decided to opt for SaaS development outsourcing, it’s essential to have a clear process. Here are the six steps to follow:
Step 1: Planning and Setting Clear Goals
First things first: make a plan and set your goals. Make sure to define the following matters:
- Key features of your SaaS product;
- Core needs and goals of your product;
- Target audience;
- Project timeline and budget;
- Your long-term vision;
- Specific skills required for your project.
A detailed project scope will guide the entire process of outsourcing SaaS development, so take the time to set this up thoughtfully.
Step 2: Shortlisting and Evaluating Outsourcing Providers
With your goals all set, start searching for an outsourcing provider. You can use anything from Google and vendor listings like Clutch.co and GoodFirms to your network of fellow SaaS founders or developers.
Once you find some decent firms, study their portfolios and client reviews. Shortlist a few that seem like a good fit and evaluate them based on technical expertise, communication style, and project management approach.
Step 3: Negotiating Terms and Signing an NDA
After you’ve chosen a provider, the next step is to negotiate terms and ensure your intellectual property protection. Discuss the pricing model (whether it’s time & material, fixed-cost, or dedicated team), delivery timelines, and any specific requirements. Sign a non-disclosure agreement (NDA) to make sure any confidential information shared during your project stays protected.
Step 4: Beginning the Development Process
With everything set, kick off the development process. The SaaS outsourcing team will typically assign a project manager who will communicate the project updates with you.
During this phase, check on your provider’s progress regularly, provide feedback as needed, and generally ensure the development meets your goals.
Step 5: Ongoing Development and Testing
SaaS development is an iterative process. This means testing and feedback loops are indispensable parts of it. As new features are built, review them to catch any issues early and make sure your product’s quality meets your standards before launch.
Step 6: Final Delivery and Post-Development Support
After the development and testing wrap-up, move on to the final delivery. Your outsourcing partner will provide the product, along with all necessary documentation and training for your in-house team (if needed).
But your cooperation doesn’t have to end here — many outsourcing providers offer post-development support. It may include bug fixes, performance improvements, and new feature releases.
How to Choose the Right SaaS Outsourcing Partner
While we’ve briefly mentioned some aspects of picking the right SaaS development outsourcing partner, there are plenty of tips that can make this decision even easier. Here are the main ones:
- Define your expectations clearly: Identify the skills you need from your outsourcing partner and set clear project requirements.
- Do your research: Explore online job marketplaces (Clutch.co, GoodFirms), freelance platforms (Upwork, TopTal, Fiverr), social media (LinkedIn), and your network.
- Check online reviews and testimonials: Explore feedback from your potential partner’s previous clients and read their case studies.
- Assess experience and expertise: Check if the provider has a background in building SaaS solutions within your niche and with the required techs and tools.
- Evaluate the communication style: Explore how your potential partner deals with time zone differences and how they handle project management and updates.
- Create a request for proposal: Use an RFP with your project description and requirements to check if a candidate can handle the task.
- Negotiate pricing and contract terms: Choose a suitable cooperation model and review the contract to understand the terms, conditions, and intellectual property rights.
- Start with a trial project: If you’re uncertain about committing to a provider, consider starting with a smaller trial project, if possible.
SaaS Outsourcing Costs and Popular Destinations
We’ve mentioned it before, but it bears repeating: outsourcing SaaS development can save you big. For example, while a US-based developer might charge $75 an hour, you can find equally skilled professionals in other regions for around $50 or even less.
According to Accelerance Analysis, the sweet spot that balances quality and cost lands around $40–$90 per hour, depending on the location and the specific expertise needed. Here’s a closer look at the report’s outcomes:
| SaaS Developer Hourly Rates | ||
|---|---|---|
| Characteristics | $20–$40/hour “The Danger Zone” | $40–$90/hour “The Sweet Spot” |
| English Proficiency | Limited fluency, often only basic communication skills | Strong English skills, clear, confident communication |
| Cultural Fit | Minimal exposure to Western clients | Extensive experience working with Western teams |
| Certifications | Few to none, typically lack enterprise-grade credentials | High-quality standards with industry-leading certifications |
| Quality | Can follow instructions but lacks problem-solving or collaboration skills | Proactive and engaged, focuses on client’s goals |
| Recruiting & Retention | Little effort to recruit and retain top talent | Focus on attracting top talent with significant experience |
When outsourcing SaaS development, you can choose among the following destinations:
- Latin America: Expect to pay from $41 to $53 for a junior SaaS developer.
- Central and Eastern Europe: Junior developers typically charge $35–$53 here.
- South Asia: The hourly rate for junior SaaS developers generally ranges from $25 to $36.
- Southeast Asia: Be prepared to pay $21–$35 per hour for a junior developer.
SaaS Outsourcing Challenges and How to Overcome Them
SaaS development outsourcing is undeniably beneficial. Yet, some challenges exist. Here are the ones you’ll likely encounter and the ways to tackle them effectively:
Maintaining Control Over the Project
When you outsource, it’s natural to worry about losing control over your project. The development team is external, and you may not have direct visibility into their daily progress.
Solution: Set up a straightforward project management process. Use tools like Jira, Trello, or Asana to create a clear workflow where all tasks are tracked. Schedule regular check-ins and progress updates with the outsourcing team.
Ensuring Security and Confidentiality
With SaaS outsourcing, there’s always a concern about protecting confidential information or complying with regulations (like GDPR or HIPAA, depending on your product).
Solution: Focus on security from the start. Evaluate your outsourcing partner’s security protocols — like their data protection measures, compliance standards, and certifications. Sign an NDA and a comprehensive contract.
Communication and Time Zone Management
Communication can become difficult if your outsourcing partner works in a different time zone. This can lead to delays, misunderstandings, and slower response times.
Solution: Find an outsourcing team with at least a few hours of overlap in your working hours. Consider tools like Slack and Zoom to make it easier to stay connected and quickly solve any issues.
Future Trends in SaaS Outsourcing for 2025
The SaaS development outsourcing market of the future will be heavily influenced by two trends: AI/ML and multi-cloud.
Artificial Intelligence and Machine Learning Focus
AI and ML will go well beyond just automation. SaaS companies will use these techs to improve everything about their products — from security to functionality.
Nokia, for example, recently expanded its SaaS offerings with AI. Their solutions allowed communication service providers (CSPs) to simplify data management, cut down organization time, and automate repetitive tasks.
Multi-Cloud Becoming the Norm
With nearly 85% of SaaS companies expected to go cloud-first by 2025, it’s clear that cloud-based solutions are here to stay. But it doesn’t stop at using just one cloud provider.
According to Flexera’s report, 89% of organizations already deploy multiple cloud environments to run their software. Within this group, 73% use a combination of public and private clouds (hybrid clouds), while 14% rely on multiple public cloud providers. Only a small percentage (2%) use several private clouds exclusively.
Why is multi-cloud such a prominent trend? It adds resilience and flexibility to SaaS companies’ systems. Plus, it’s a way to save on costs by choosing the best-priced or most efficient provider for each required service — say, storage, computing power, or security.
Looking for a Reliable Outsourcing Partner?
So, there you have it. An in-depth guide into SaaS outsourcing — an approach that promises reduced costs, faster time-to-market, and specialized expertise that’s hard to find locally.
But you need the right partner to stand out with your SaaS product. The one who can scale efficiently, stay adaptable, and keep pace with industry changes — all without putting a strain on your in-house team. The partner like JetBase.
Our team has 10+ of experience working on SaaS projects, with 60 of them successfully launched. So, if you need a hand, let’s chat and see how we can help you.
